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    How Investors Can Unlock the Power of Profit Margins

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    Running a business is all about making a profit, so it makes sense that one of the best measures of a company's performance is its profit margins.

    Strong profit margins almost always mean a company is well-run, stable, and making money.

    A company with healthy profit margins indicates it is efficient at allocating capital and controlling costs, so it can deliver more revenue to the bottom line.

    It also means the business has built-in safety. Therefore, a sales slump is less likely to cause an operating loss.

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  • Intel

  • Can "Perceptual Computing" Help Intel Get Its Groove Back? It's like something out of "Star Trek." This new technology could help the chip giant turn things around for good. Read More...
  • Microsoft, Intel and Cisco Follow Path Predicted in 'Leaders to Laggards' Series Money Morning subscribers who read our Leaders to Laggards series on the flagging fortunes of Microsoft Corp. (Nasdaq: MSFT), Intel Corp. (Nasdaq: INTC) and Cisco Systems Inc. (Nasdaq: CSCO) weren't surprised by subsequent developments, since we told you exactly what to expect.

    The Leaders to Laggards articles described how each company's failure to anticipate changes in their markets undermined their ability to grow revenue. Consequently, their stocks - which many investors rode to massive profits in the 1990s - have languished for the past decade.

    Those tribulations have continued since the publication of our series. Microsoft and Cisco have struggled mightily, and as predicted, only Intel has managed to make headway.

    Why Intel Is Still a 'Buy'

    Intel surprised Wall Street with better-than-expected earnings last week - its standout divisions pointing the way to the future growth that for years had eluded the company.

    Profits were up 2%, while revenue jumped 21% year-over-year. And gross margins edged up to 64% from 61% in the previous quarter.

    Revenue from data centers, which provide the infrastructure for the cloud-computing trend that is now beginning to dominate mobile devices such as tablets and smartphones, was up 15.2% and accounted for nearly 20% of total sales.

    Intel sees data centers as a major source of growth. The company expects sales to rise to $10 billion this year and to $20 billion within five years.

    An even bigger surprise was the strength in the chipmaker's PC business, which accounted for 64% of Intel's revenue. Sales of the PC division rose 11% despite sluggish growth of about 2.5% in the overall PC market.

    "We knew that there would be strength in the servers, but to see double-digit growth in their PC unit is great," Michael Shinnick, a money managerat Wasatch Advisors Inc.,told Bloomberg News.

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  • What's Wrong with Intel Corp.? Money Morning Chief Investment Strategist Keith Fitz-Gerald is back on FoxBusiness' "Bulls & Bears" program for a look at technology companies' earnings reports. While some are thriving, others like Intel Corp. (Nasdaq: INTC) are stuck in a stock price standstill. Watch Fitz-Gerald and his "B&B" counterparts debate whether or not Intel is a "Buy." Read More...
  • Intel Corp. (Nasdaq: INTC) and AMD (Nasdaq: AMD) Betting Big on Combination Chips The Consumer Electronics Show (CES) kicks off tomorrow (Wednesday) night with a keynote address from Microsoft Corp. (Nasdaq: MSFT) Chief Executive Officer Steve Balmer. But the big attraction at the Las Vegas conference will be the so-called "combination chips" expected to be unveiled by Intel Corp. (Nasdaq: INTC) and Advanced Micro Devices Inc. (Nasdaq: AMD).

    The highly-anticipated chips could deliver one of the biggest advances in years for the
    technology that powers laptop and desktop computers, according to a report in The Wall Street Journal.

    The new chips are designed to incorporate the microprocessors that calculate formulas and run the software on most personal computers with the more obscure graphics processing units (GPU) - the devices responsible for rendering images in video games and movies and converting audio files for listening.

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  • Buy, Sell or Hold: Intel Corp. (Nasdaq: INTC) Offers the Security and Profit Potential that Few Other Investments Can It's not easy to find a safe investment these days. The rulebook has been thrown out and mercantilism reigns supreme between nation states. The world is experiencing significant and rapid changes in currency exchange rates, as policymakers around the world take a beggar thy neighbor approach toward economic security.

    There are very few multi-national companies that are not being seriously impacted by these changes.

    However, there is one company that should be a safe beacon in these stormy market conditions: Intel Corp. (Nasdaq: INTC).

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  • Intel Corp. Invests $8 Billion to Lead the Next Generation of the Semiconductor Industry Intel Corp. (Nasdaq: INTC) announced Tuesday that it would invest up to $8 billion in U.S. manufacturing with the goal of keeping its position as a semiconductor industry trailblazer and beat rivals in creating the next generation of silicon chips.

    The world's biggest chipmaker will build a new factory in Oregon and upgrade four existing plants in Arizona and Oregon. The move emphasizes Intel's position as the biggest manufacturer of microprocessors and its ability to keep up with the semiconductor world's rapid and expensive pace.

    The upgraded Intel plants will produce the company's most technologically advanced chips and support its move to 22-nanometer production. This next generation of chip production reduces the line widths on circuits, which lowers costs and improves capability. Currently chips are made with a 32-nanometer process.

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  • Will Other Tech Companies Follow Cisco's Lead by Paying Out Dividends? When Cisco Systems Inc. (Nasdaq: CSCO) last week announced that it would institute the first dividend in company history, it raised hopes among investors that hi-tech companies would finally begin to loosen the strings on their hefty cash holdings.

    But will other tech giants really follow suit and institute dividends of their own?

    Cisco Chief Executive Officer John Chambers announced the payout last Tuesday, saying the networking giant would reward shareholders with a dividend likely to yield between 1% and 2%. The exact amount will be determined in the coming months while the company considers developments on the tax front and broader market conditions.

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  • Buy, Sell or Hold: Hewlett-Packard Co. (NYSE: HPQ) – It's Time to Sell This High-Tech Stalwart Now's not the time to own Hewlett-Packard Co. (NYSE: HPQ).

    Long one of the bluest of blue chips in the U.S. high-tech sector, H-P has been in the spotlight and under the gun since its early August ouster of Chief Executive Officer Mark Hurd.

    And while Hurd's unceremonious resignation following an internal sexual harassment investigation has been dominated the headlines when it comes to stories about H-P, the... Read More...
  • Why Upbeat Earnings Reports Mean Caution to Investors While earnings reports continue to pour out each day, investors should be careful before being excitedly swayed by strong financials - there is much more of the big picture to consider.

    Stocks failed to get traction in the middle of last week after Alcoa (NYSE: AA) and Intel (Nasdaq: INTC) earnings reports underwhelmed investors, and Friday they spun off the road. The culprit: Fears that recent earnings gains represented a peak, and that weak readings on the economy were more representative of current conditions.

    Retail sales disappointed and the Federal Reserve cut its 2010 growth forecast. Even word that Singapore grew at a record pace of 19.3% in the second quarter couldn't lift the air of despondency on Wall Street.

    To read why there's a cloud over Wall Street, click here.


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  • Tech Stocks Priced for Bargain Deals, Edge Higher on Analyst Upgrades Analyst upgrades lifted the technology sector on Monday, as cheap valuations and strong balance sheets in tech companies are making for good buys, as outlined in Money Morning's Midyear Forecast on tech stocks.

    Analysts say tech stocks haven't been this cheap since 1992, excluding a brief period before the March 2009 bull market started, and now is the time to buy.

    "Tech stocks have some of the strongest balance sheets in the S&P 500," Bruce Bittles, chief investment strategist of Robert W. Baird & Co., told Bloomberg. "The valuations are inexpensive - that's another plus. It's a good time to invest in tech."

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  • Caution Is the Buzzword After Last Week's Stock Market Drop Risk aversion was the story of the week last week amid rising exasperation with Eurozone countries to act in unison to solve their debt afflictions and swelling concerns that financial reform may constrain U.S. financial companies' profits. Economic reports didn't offer much help to the stock market, as industrial manufacturing outlooks showed a surprising amount of slowing.

    Stocks mounted a modest bounce on Friday after a week that saw the major market averages sink another 2% to 4%. All of the positive action in the week came in a single low-volume session on Thursday that didn't ultimately do much to erase the negative tone of the worst May since the Kennedy administration.

    More troublesome was the fact that positive corporate earnings news and mergers failed to bolster the appetite for stocks. Companies as varied as Dell Inc. (Nasdaq: DELL), Chicos FAS Inc. (NYSE: CHS), Brocade Communications Systems Inc. (Nasdaq: BRCD) and Sears Holding Corp. (Nasdaq: SHLD) beat analysts' expectations this month but saw their shares thrashed by up to 20%.

    Most emerging markets fell hard during the week, and there was a broad sense that institutional investors were purging portfolios of high-beta assets that could be vulnerable to a slowdown in earnings growth. This is why bland food makers like Campbell Soup Co. (NYSE: CPB) and General Mills (NYSE: GIS) have survived the month without a crunch, but more economically sensitive companies like Johnson & Johnson (NYSE: JNJ) and Intel Corp. (Nasdaq: INTC) have flailed.

    While the Standard & Poor's 500 Index did not close on Friday above its 200-day average -- the level that separates bull cycles from bear cycles -- the Nasdaq 100, Midcap 400 and Smallcap 600 did. This will be used by bulls as evidence that the May decline was just a modest setback on an upward journey.

    Yet bears are making a good case that this is much more than a mere correction. Breadth has been hellaciously negative except for the 11-1 positive session on Thursday, and less than 100 stocks are making new highs on the three major U.S. exchanges. Plus volume has been much bigger on down days than up days, a sign of distribution.

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  • Eight Semiconductor Stocks To Charge Up Your Portfolio Today's world literally runs on semiconductors. Virtually every device that plugs in or uses a battery has its functions controlled by semiconductors of one type or another. And, with spending curtailed in the recent financial crisis, many of the semiconductors in use are either wearing out or going out of date. But, good times are here again for semiconductors. Here's how to make a profit on the new semiconductor boom market. Read More...
  • Intel and JPMorgan Results Boost Fourth Quarter Earnings Season, but Market Swoons Stock market bellwethers Intel Corp. (Nasdaq: INTC) and JPMorgan Chase & Co. (NYSE: JPM) gave earnings season a booster shot Friday when they released fourth-quarter results that exceeded analysts' expectations.

    And even though the market reacted negatively to the news -- suffering its worst losses of the New Year -- their results add positive momentum to an earnings season that is expected to provide an abundance of good news.

    For the first time since the second quarter of 2007, fourth quarter earnings of stocks in the Standard & Poor's 500 Index should be higher than they were the year before. That would break the longest losing streak since S&P began keeping track of operating earnings in 1991.

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  • Investment News Briefs With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world. Nikkei Hits Three-Month High; Obama to Small Banks: Step Up the Lending; Tax Credit Fuels 7.4% Gain in November Home Sales; OPEC Leaves Oil Output Unchanged; WSJ: Apple Approaches CBS, Disney About Internet Television Service; Report: Computer Hackers Stole Millions of Dollars from Citi; Federal Court Upholds Ruling on Patent Infringement by Microsoft; Buffett Adds Comcast COO to Berkshire Board A weaker yen and strong technology stocks helped Japan's Nikkei 225 finish 1.9% higher at 10,378.03 yesterday (Tuesday), the highest level in three months. Most shares of tech companies gained after Barclays Capital (NYSE ADR: BCS) upgraded its rating on Intel Corp. (Nasdaq: INTC) from overweight to market weight on Monday. "The U.S. dollar strength is undoubtedly helping out the Nikkei," Cameron Peacock, an analyst at IG Markets told MarketWatch.com. "With Japan being such an export-focused economy, the weaker yen is a real positive for Japanese companies' earnings." The White House will seek to remove bureaucratic barriers that prevent community banks from lending so they can help businesses seize "enormous opportunities" for growth, U.S. President Barack Obama told the heads of a dozen small lenders yesterday (Tuesday). The president encouraged the bankers to keep the nascent recovery of the U.S. economy going by increasing their lending to small businesses and supporting the financial reform measures being proposed on Capitol Hill. Read More...